Superintendents Question Long-Term Consolidation Savings

October 31, 2009 at 12:00 am

Statehouse News Service

Question 3 on the statewide referendum Nov. 3 asks voters to repeal a mandatory school consolidation law passed in 2007.

The law aimed to reorganize several school units into larger regional units and to otherwise reduce administrative and business costs in districts where consolidation was unfeasible. The law also aimed to shed paperwork for the Dept. of Education and streamline budget review by ensuring all districts used similar budget formats and reorganized districts submitted one budget instead of numerous budgets by town or district.

Following two years of planning, meeting, debating and re-aligning school boards, 98 school units have shed administrative staff, centralized superintendent offices and otherwise stuffed administrative duties into 26 new Regional School Units (RSUs) or Alternative Organizational Structures (AOS).

Whether consolidation has been the boon to cost efficiencies the state had hoped to gain is a matter of debate among superintendents. Some have seen reduced operating costs by pooling buying power, others say it’s business as usual and they’ve not experienced significant savings.

Threats of withholding state general-purpose aid to education, in some cases up to 50 percent of annual state funding levels, became the stick to encourage rapid compliance with the consolidation law. Continued, uninterrupted receipt of state aid became the carrot offered by the Dept. of Education.

All the same, 126 units have yet to form a plan or have plans approved by voters, and the carrot-and-stick approach fell by the wayside earlier this year after the legislature waived penalties for one year for failure to comply. Whether in compliance or out, all districts will receive state funding this year.

Whether reorganized in broad strokes as new RSUs, or mildly altered through a provision known as Alternate Organizational Structures, superintendents throughout Maine agree the law’s greatest savings, for most, come in reduced administrative costs.

After initial savings reducing administrative overhead and centralizing offices, however, superintendents question the amount of savings to be reached year after year. Further, the current law does not contain a provision for reporting savings to the Maine Dept. of Education.

Among those upset by the apparent bait and switch of general-purpose aid is Supt. Greg Potter of RSU 12. The single district replaces the former school administrative units for Alna, Wiscasset, Westport Island, Palermo, Somerville, Whitefield, Windsor, and Chelsea.

Passing a regional budget across eight towns has been problematic for RSU 12, which faces its fourth vote to approve its combined school budget next month.

Instead of savings, the RSU is experiencing a proposed budget 2.18 percent higher than the cumulative amount of the eight single units in 2008-09.

An increase in property valuations, coupled with a decrease in enrollment, lowered the region’s allotment of state aid by $1.4 million for the 2009-10 academic year.

“It’s angered a lot of voters,” Supt. Potter said. “They feel they did their due diligence to comply on time. They listened to the Commissioner [Gendron], to the Governor [Baldacci] and to the Dept. of Education and they went ahead and consolidated, yet penalties have not been adjusted to those that did not [comply].”

Consolidating has presented a challenge, Potter said, in part because taxpayers won’t immediately see reduced taxes.

The expectation set forth was that taxpayers would experience significant savings, he said. After revaluation, “they won’t see lower taxes right away here,” Potter said.

Potter anticipates the cost savings will come over time.

“We have to examine programs from top to bottom and that will take some time,” he said. “We’re taking three systems and putting them together and making the best of it without devastating student programming.”

RSU 12 has reduced administrative costs by combining three central offices into one and reducing the number of superintendents from three to one.

“Our administrative costs are now 3 percent of the total budget and that is well below state levels,” he said.

Superintendent Bill Webster and RSU 24 are touted by the Maine Dept. of Education as a regionalization success story. The district includes schools in Ellsworth, Franklin, Hancock, Lamoine, Mariaville, Steuben, Gouldsboro, Sorrento, Eastbrook, Waltham, Sullivan, and Winter Harbor and has realized savings near $400,000 through consolidation, which became effective July 1, 2009.

The most notable savings has been with health insurance costs and eliminating duplicate positions. RSU 24 reduced its insurance premium from approximately $168,000 to $70,000.

Twelve towns and 11 schools comprise RSU 24, where school advisory committees replace school boards. RSU 24 also shuttered three administrative offices in favor of one central office.

“My expectation is there is probably another $200-$300,000 in savings over time, particularly in consolidating purchasing and commodities and supplies,” Webster said.

The added cost efficiencies have allowed RSU 24 to keep the resources in the classroom and netted the equivalent of eight teachers or 16 educational technician positions.

“These efficiencies will let us keep the resources in the classrooms,” he said.

He’s unsure how savings will be influenced in years to come, when the state’s general-purpose aid falters.

“I think the biggest concern for education is not consolidation,” Webster said. “It’s the uncertainty of where we’re headed. Since 2007, the legislature keeps changing the law and if voters repeal consolidation there will be more uncertainty.”

Should voters repeal, he believes the towns of RSU 24 will continue to work together, in part because the districts have been able to add new guidance and a pre-kindergarten program.

“There may be reasons to oppose consolidation, but at least in our case, saving money is not one of them,” he said.

Webster says RSU 24 has made a good start but still has a long way to go.

Still, the ever-changing funding levels from the state pose a bigger threat to Webster.

“It’s difficult to consider staff and other potentials in an environment where we are not sure what we’re going to have,” he said. “The commissioner has been clear in saying there will be curtailments [in funding this year].”

When, where and how much curtailment weighs on educators who, like others dependent upon state revenue, face a certain state budget shortfall.

Superintendent Rob Liebow is pragmatic. His district is one of five Alternative Organizational Structures approved by the DOE. Prior to the consolidation law, Liebow oversaw the school districts on Mount Desert Island, Frenchboro, Cranberry Isles and Swan’s Island via a single central administrative office.

“It’s business as usual,” he said. “Trenton is the only place where there is some visible savings.”

Liebow oversees unique budgets for each school in his care and then melds the budget into one umbrella document for the DOE, satisfying the need to simplify annual budget reporting.

Initial savings for some districts will be difficult to replicate year after year, Liebow believes.

“A lot of these towns were sold dramatic savings,” Liebow said of the consolidation law. “After combining central offices, we can’t budget significant savings in the long run. Unless they close small schools, then we’re not going to have gargantuan savings.”

Liebow sees the need for local control and doubts the state’s one-size-fits-all approach to creating school districts will have uniform success. He argues local control and local interests may make the decisions to consolidate certain schools, but the impetus to provide and fund programming still occurs at the local level and dictates expenses.

While consolidation efforts continue, the DOE’s focus is on dwindling revenue, which will reduce the amount of general purpose aid the state is able to give schools each year. Added to reduced aid is the threat of year-to-year budget curtailments prompted by shortfalls in the state budget, according to David Connerty-Marin, DOE spokesperson.

In other words, the amount of state aid educators believe they will receive annually based on enrollment and property valuation can change based on revenue, or lack thereof.

The 2009-10 general purpose aid budget is $947 million, with an additional $55 million in federal American Reinvestment and Recovery Act Funds. In 2010-11 the department plans to fund $887 million with an additional $59 million in federal funds.

By 2012, however, federal funds dry up and the state hopes to stabilize funding levels at $887 million.

Consolidating and realizing savings now, said Connerty-Marin, is prudent for the future realities of state education funding.

How the state tracks the savings, however, is unknown. According to Connerty-Marin, districts are not required to report savings associated with consolidation this year. Savings will become evident, he said, when the department begins reviewing budgets next year.

Some superintendents believe all of the savings from consolidation will be realized in the infancy of the new districts. After the dust settles on reducing the number of central offices and administrative staff, superintendents question the amount of savings that can be promised.

This reality is evidenced by the AOS systems, some of which used a centralized office system prior to the consolidation law and have not experienced significant savings after consolidation.

Webster, Liebow and Potter agree if voters repeal consolidation many school districts will retain current configurations and will also embrace a provision that allows individual schools to break away from larger units.

Regardless of how repeal votes tally Nov. 3, Webster sees the 13 towns he serves committed to the spirit of consolidation.

“We are committed to keeping schools open and sharing resources,” Webster said. “As difficult as it’s been to get where we are, it will be even more difficult to turn around.”